DM Shifts Affect ServiceMaster Operations
The ServiceMaster Co. generated $169.7 million in net income, and $3.43 billion in revenue, for fiscal 2006. But while its revenue rose from 2005’s $3.24 billion, its net income dropped from $198.9 million, in part doe to changes in its direct response marketing activities. The fiscal year ended on Dec. 31.
For the year, ServiceMaster’s TruGreen LawnCare segment generated $1.05 billion, up 3% from 2005’s level. According to the company, full-program residential customer counts were comparable with last year, as increased responses from direct mail efforts offset declines in the company’s telemarketing sales. The unit generated operating income of $158, a drop from 2005’s $172 million. ServiceMaster attributed the drop to investments in new programs designed to improve customer service, as well as higher overhead costs.
Separately, the company’s American Home Shield unit reported revenue of $565 million, 7% from last year’s level. But much of this was driven by contract renewal and increased pricing: direct to consumer sales dropped 6%, due to lower rates from the company’s direct mail programs.
The company’s TruGreen LandCare operation saw its revenue drop 2%, to $444, and its Terminex unit’s fortunes rise 2%, to $1.08 billion. ServiceMaster attributed these changes to factors apart from direct marketing, including weather conditions.
